Highlights From the Data for ERM & Solvency II Conference

Clearwater recently attended the fifth annual Data for ERM & Solvency II conference in London. Regulators and insurance firms discussed the latest insights and practical guidance on current data management challenges. Below are highlights from sessions that focused on what data is needed for Solvency II Pillar III filings, what the European Insurance and Occupational Pensions Authority (EIOPA) plans on doing with this data, how the data will be beneficial, and next steps.

Regulatory Perspective

Patrick Hoedjes, Head of the Oversight and Supervisory Convergence at EIOPA, gave valuable insight into the direction EIOPA is taking and what they have accomplished so far. As intended, all Quantitative Reporting Templates (QRTs) are now in a central repository for EIOPA’s disposal. When asked about specifics of how the data will be used, Hoedjes mentioned that not all data will be used at the same time. Instead, data will be used to provide the information that regulators need in times of market stress and changes or information needed on specific companies, especially in reference to their liquidity. Hoedjes acknowledged that moving forward, reporting must be improved to leverage this data as a useful tool for transparency.

Polling Question Insights

Throughout the conference, session attendees were polled on various questions, which provided valuable insights into the challenges and solutions of Solvency II Pillar III data.

The responses to this question were almost evenly divided. Half of the respondents believed it would be a valuable tool to benchmark against peers, while the other half thought it would not be read by anyone. This view reflected the industry’s lack of confidence in the purpose and benefits of the substantial new regulatory reporting requirements.

Polling question 2: Who is expected to read and review this data?

Some insurers said they will look at credit ratings of re-insurers, and others responded that the data will be used to benchmark against peers. The most popular response from the audience was that they “expect very few people to read it.”

Polling question 3: Did you feel you had enough insight into what the regulators were trying to obtain from the data?

Many attendees did not have conversations with regulators but did have conversations with the Big Four firms on what their peers were doing. Audience members had little insight into how the data was used by regulators, and one panelist hadn’t had any contact with regulators. In the case of Pillar III disclosures, much data is given, but institutions are still struggling to see the benefit.

Polling question 4: If we were to dispense with Pilar III, would things be any different?

Resoundingly, the feedback was that from the industry’s perspective, much of the information disclosed was information they already had. Disclosing it does not change much.

Regulatory Panel Discussion

The Regulatory panel discussion featured Dr. Moja Piskuric of Insurance Supervision Agency of Slovenia; Monika Samtani of Gibraltar Financial Services Commission; and Patrick Hoedjes of EIOPA. In response to the audience’s low confidence in the regulatory process, the panel reiterated the goal of the new regulation and discussed how regulators are planning to use the data. Some notable points from this discussion included that metadata is important to regulators because it provides insight into processes and systems of governance. EIOPA has expectations of quality data, and examining data variances received at the national level is crucial to resolving errors in processes. One insurer said they just provide what they infer is the correct data point and hope they don’t receive regulator feedback, highlighting just how in flux the process is at this point. One panelist argued that collaboration needed to be improved and that regulators were sometimes inaccessible.

Panelists had questions on whether the national supervisory authorities should be contacted regarding guidance interpretations as opposed to EIOPA. Regulators are now asking different questions, reflecting a more principles-based approach to regulatory review. Previously regulators asked about capital adequacy, but are now asking about decision making with regard to capital adequacy. Requirements are not on risks but for the propensity of the company to manage their risks.

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Diana helps insurers improve and streamline their investment accounting and reporting. Diana specializes in ensuring accurate and proactive communication of NAIC investment-related updates internally, and to Clearwater clients. She has a bachelor's in accounting and finance from Boise State University.